State of Oregon

Marijuana: Falling Prices and Retailer Saturation?

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Recreational marijuana prices are falling and, in much of the state, retail options are plentiful. It appears to be a cannabis consumer’s dream, or at least what voters hoped for back in 2014 when Measure 91 was passed. Now, it has not been an entirely smooth ride to date, and concerns remain. Chief among them, as the new Secretary of State audit spells out, would be enforcement and ensuring products are tracked and accounted for. Additionally, potential saturation issues for growers, processors, and retailers indicate that some industry shakeout, or market consolidation is likely.

First, marijuana prices are continuing to decline. This is true here in Oregon, and in Colorado and Washington. Much of this is to be expected as businesses become more experienced in the newly legalized industry, which allows for efficiency gains. Furthermore, increased competition can lead to lower prices as well. Now, given Oregon levies the marijuana tax based on price, our office lists price as a risk to the outlook. Lower prices, everything else equal, would lead to lower revenues. However, lower prices should also lead to larger consumption. Demand curves do slope down. Further complicating the marijuana industry is the ongoing presence of the black market, which also competes on price, and can undercut the legal market at least in part due to the lack of regulations, product testing, etc.

While lower prices are a clear boon for consumers, they can lead to problems for some businesses. This is particularly true for those unable to adjust due to their business model, fixed costs, debt loads, and the like. For example, a firm may be profitable at a certain price point, however marijuana prices are falling by 10-20% per year. If that firm is unable to lower its operating expenses enough, accept lower profit margins, etc. then it can be in financial trouble. Grumblings within the industry suggest this is happening, at least in part due to market saturation. Now, is it truly a concern from an industry wide perspective, or from a consumer’s point of view? Unlikely. However, for any particular business it can be devastating.

This second chart tries to frame recreational marijuana market saturation here in Oregon relative to Colorado and Washington. In all three states, the number of recreational marijuana retailers is about the same, or just over 500. However, once you adjust the numbers based on population, it is clear that Oregon has significantly more stores. This does not necessarily mean Oregon is over-stored. It may be, but it may also be the case that the other states are under-stored. In fact, Colorado currently supports more marijuana stores overall due to their robust medical marijuana market. The error bars in the chart are an effort to show both the total number of marijuana storefronts (recreational + medical), in addition to just the recreational stores.

Now, there are an additional 140 or so retailer applications in the OLCC system. Should these stores open, it would push Oregon significantly past Colorado, even on a population adjusted basis. What all of this does mean is there is more competition for every Oregon recreational marijuana dollar, and this will likely increase. As such, average sales per retailer in Oregon are lower, leading to the industry shakeout or market consolidation concerns or expectations. Pete Danko had a good article in the Portland Business Journal recently about this.

As economist Beau Whitney notes, it’s easy to envision a long-run outcome for marijuana that is similar to the beer industry. One segment of the market is mass-produced and lower priced products. This will be the end result of the commodification of marijuana. Margins will be low, but due to scale, businesses remain viable. These are more likely to be outdoor grow operations as well, due to costs. Even in a world of legalized marijuana nationwide, it is plausible that Oregon, along with California, would remain a national leader in this market due to agricultural and growing conditions in the Emerald Triangle.

The second segment of the marijuana market would be similar to craft beer today. This segment would include smaller grow operations of specialty strains, higher value-added products like oils, creams and edibles. Such products will require and command higher prices. However, as our office has noted previously, it is here among the value-added manufacturing processes, in addition to building up the broader cluster of suppliers, and ancillary industries that Oregon will see the real economic impact of recreational marijuana. If all we have are growers and retailers, there will not be a large impact. Furthermore, the long-term potential of exporting Oregon products and business know-how to the rest of the country remains large.

Even if this market bifurcation materializes, it does not mean it will be an entirely smooth transformation. Conditions today are great for consumers, but potentially worrisome for some businesses. It will be interesting to watch how the market and industry continues to evolve. Our office’s forecast expects sales to continue to increase due to both new customers as usage increases and social acceptance of marijuana rises over time, and due to black market conversion. It’s the latter that is the most worrisome from a long-run perspective of industry viability. This is why enforcement and compliance are key issues being addressed by policymakers and industry professionals today.

Recreational Marijuana Sales (Graph of the Week)

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The big news this morning is that the federal government, led by Attorney General Jeff Sessions is set to rescind the so-called Cole memo, or memos as the case may be. For those who don’t know, the New York Times describes it as “an Obama-era policy of discouraging federal prosecutors from bringing charges of marijuana-related crimes in states that had legalized sales of the drug.” In practice this allowed Colorado and Washington first, followed by Oregon, Alaska, Nevada, and now California to establish recreational marijuana markets and not worry too heavily about federal prosecutors cracking down on these operations which were legal at the state level, but never legal at the federal level.

Last year, our office was tasked with forecasting recreational marijuana tax revenues for the state. You can read our summary here. Included in our work, and discussed with our advisory group was the possibility of changes in federal policy, or direction. This was especially salient given the changes in the executive branch. Our forecast summarizes it as a risk (PDF pg 38):

Finally, the one risk that looms large over the entire forecast is the federal government. While there has been no clear warning or action taken, there is a non-zero chance the federal government could step in and eliminate, or severely restrict recreational marijuana sales. In this event, taxes collected would be considerably less than forecasted.

Well, now there does appear to some action taken. Ultimately it will likely come down to enforcement, and the choices prosecutors make. We will be meeting with our advisory group again this month, and will discuss the implications of these changes, along with other issues and trends in the recreational marijuana market. More on this after our meeting and as we get closer to the Feb 16th forecast.

All of this brings us to this edition of the Graph of the Week, which shows monthly recreational marijuana sales for Colorado, Washington, Oregon and Nevada. These sales figures are estimates based on reported tax collections, and do not include medical marijuana sales. In total across the four states, they are seeing around $250 million in recreational marijuana sales per month. Additionally, all states continue to see growth in this newly legalized world. However the exact level of sales is also determined by the size of the population, usage rates, and tax policy, among other factors.

In fact, in my preferred chart in comparing sales trends, Oregon’s first year and a half of sales are nearly identical to Colorado’s first year and a half of sales, after you control for population size. Let’s call this the Bonus Graph of the Week. Also note that Nevada is seeing strong sales in their first few months. Nevada is currently selling about the same amount of recreational marijuana as Oregon is today, however with a much smaller population. Their initial adjusted sales data is the highest we’ve seen among the legalized states. Nevada and Las Vegas in particular are also a tourism hub, and thus are seeing larger sales than the resident population alone would suggest. I don’t have a huge reason to believe cannabis tourism is a big factor in Oregon’s sales, but I think it clearly is in Nevada.

As we write in our forecasts, there are a lot of risks to the recreational marijuana outlook. In particular, usage rates, prices, harvest levels, regulations and the like both have upside and downside implications for the forecast. However, none of those loom as large as changes in federal policy. Today’s actions may end up mattering substantially, or not so much, but we don’t know the answer yet. Our office will continue to work with our advisors, and to adjust the tax revenue outlook accordingly.

Oregon Recreational Marijuana Forecast

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SB 845, among other things, would give our office the recreational marijuana forecast responsibility. While not current law yet, we went ahead and produced such a forecast for the first time in our most recent quarterly forecast. What follows below the fold is an extended summary of our forecast work, including lots of pictures, I mean charts, for those interested.

Currently the outlook for recreational marijuana sales and tax collections remains highly uncertain. While Oregon has now collected just over a year’s worth of taxes, there have been substantial changes during this time that complicate any analysis. Early start sales through medical dispensaries were taxed at a 25 percent of rate, while sales at OLCC licensed retailers are now taxed at a 17 percent rate, with the local option of adding up to 3 additional percent. Furthermore, regulatory changes, more stringent product testing requirements, and Mother Nature all impacted and reduced available supply on the market during this time.

The first chart shows monthly tax collections as reported by the Department of Revenue, with the colors representing the different state tax rates. During the transition period there were recreational sales at both medical dispensaries (taxed at 25%) and at OLCC retailers (taxed at 17%).  The percentages listed are the effective tax rates after blending together sales under both regimes. These figures do not include any of the local option taxes, just the state portion.

As such, it is challenging to get a handle on the underlying trends in this newly legalized world. Thankfully, Oregon is not alone. Both Colorado and Washington are two years ahead of us. Both states have seen tremendous growth in sales and tax collections, which serves as a guide for where Oregon is likely headed in the near-term. Over time, as the market matures, future growth will follow trends in the economy and consumer spending. However the coming few years will see strong growth as the product becomes more widely available, more socially acceptable, and more black and gray market sales are realized in the legal market.

Certainly, one year’s worth of tax collections, and one set of quarterly tax returns filed by dispensaries is more valuable than no data. Our office’s forecasting responsibilities are made considerably easier than what faced those estimating the potential impact of Measure 91 (2014) which legalized recreational sales. That said, one year’s worth of data is not enough to build a full-fledged forecasting model, particularly when it is a brand new legal market. Over time, as we accumulate more data, a longer history of sales, and detailed breakdowns of consumer purchases and demographics, our office will build an econometric model. Until then, in consultation with our advisory group, and using Colorado and Washington as a guide, our office is relying on trends for the short-term outlook.

In terms of sales, Oregon’s first year closely tracks Colorado’s first year and outpaces Washington’s. The numbers in the graph below are estimated sales figures based on actual tax collections. Both Colorado and Washington are larger states than Oregon, so we adjust their figures based on the relative size of the adult population.

There are at least four main reasons for this pattern:

First, marijuana usage rates from surveys indicate a larger share of Oregonians have used marijuana in the past month than what is reported in Washington. As such, Oregon is more likely to see larger sales than Washington, after adjusting for population size. However, usage is not the only measure that matters, as Colorado’s usage rates are even higher than Oregon’s. Note that these national health surveys are based on responses prior to recreational legalization.

Second, prices and taxes matter. Oregon has a significantly lower tax rate than does Washington, which helps keep final consumer prices lower. Furthermore, the first set of quarterly tax returns, a very limited data set, indicates that Oregon prices were very competitive with Washington prices, even though Washington had two additional years to get accustomed to the newly legal market, license growers, processors and the like. A lower retail price, everything else equal, should bring more consumers and more black market conversions.

Third, the cross-border effect with legal sales beginning earlier in Washington likely had an impact on Oregon’s first year of sales. Counties in southwest Washington saw sales fall by nearly 40 percent once Oregon’s early sales began. Clearly there was plenty of cross-border activity. Effectively this meant Oregon had somewhat of a built-in customer base who were used to purchasing in the legal market. Thus Oregon’s initial sales were larger than in Washington, but this may have some to do with social acceptance and being used to the new system rather than fundamentally stronger sales.

Fourth, both Colorado and Washington initially had relatively few retail outlets in major population centers. In Colorado, Denver had retailers but Boulder did not initially. In Washington, Seattle had only a few retailers at first, but have added quite a few in recent years. As such, some of each state’s strong growth in the first two years was simply due to market access and product availability, particularly in places where lots of people live. It is unlikely this is a similar issue in Oregon, with our major population centers having dispensaries at first, and retailers now. Not that Oregon is overstored, or that there cannot be more room for growth – Colorado, for example, has considerably more retailers even after adjusting for their larger population – however lack of consumer access does not appear to be a major issue in Oregon today for much of the population.

In terms of the outlook, Oregon is poised for strong growth in the coming years. However, given the above and the advice from our advisory group, our office is not forecasting revenues to be quite as strong as those seen in Colorado over their second and third years.

This outlook remains highly uncertain with substantial upside and downside risks.

On the downside, supply constraints that keep products and inventory low will result in fewer sales, and tax collections. Such constraints could be regulatory changes that impact grower, processors or retailers, or regulatory bottlenecks where companies in the industry are unable to get their licenses, renewals or tests completed or approved in a timely manner. Another downside risk for tax collections are prices, given Oregon levies the tax based on the sales price. To date in Colorado and Washington, prices have fallen around 20 percent per year. Marijuana is a commodity and eventually will be commoditized. How far and how quickly prices decline is a considerable risk to the outlook for tax collections. Offsetting this risk somewhat is the fact that lower prices should result in larger sales, helping to buoy tax collections overall, which is what has happened in both Colorado and Washington so far. Finally, the one risk that looms large over the entire forecast is the federal government. While there has been no clear warning or action taken, there is a non-zero chance the federal government could step in and eliminate, or severely restrict recreational marijuana sales. In this event, taxes collected would be considerably less than forecasted.

On the upside, consumers overall could get more comfortable with legalized recreational marijuana sales, and the industry gains broader social acceptance, resulting in larger sales. Furthermore, a faster rate of black market conversion would also result in more legal sales. Similarly, conversions from the medical marijuana market to the recreational market would result in more sales and taxes collections. The impact of the seed-to-sale tracking system may also increase activity within the legal market and restrict the flow of product into the black market.

While the sales and tax collection outlook is uncertain, it is also fairly straightforward. The same cannot be said for distributing the taxes, or at least not yet. Currently there have been no distributions from the collected recreational marijuana taxes and there are likely to be none in the current biennium. Start-up costs to OLCC and other state programs need to be repaid first, with only the net revenues after accounting for these costs available for transfer to recipient programs like schools, state police, city and county law enforcement and the like. The exact reimbursement figures will be finalized in the coming months, with the first tax distributions made early in the 2017-19 biennium.

The process and timing for future tax distributions is as follows. First, retailers pay taxes on a monthly basis. These are the figures reported periodically in the media and other outlets. However these taxes are not immediately available for distribution. They only become available for recipient programs once the Department of Revenue has received and processed a retailer’s quarterly tax return. This ensures transfers are made based on the correct, not estimated, taxes paid by retailers. As such there is a time lag of between one and two quarters from when taxes are initially paid to the Department of Revenue and when they are available to transfer to programs. This discrepancy is likely to shorten some in the future as retailers file their taxes in a timelier manner, however the time lag will not be eliminated entirely. The chart below tries to show the lag between the tax collections paid on a monthly basis and when they become available for distribution.

Given no distributions will be made in the current 2015-17 biennium, the accumulated revenues are carried forward into 2017-19 and will be distributed then. Again, note that the Tax Revenues reported in our office’s forecast tables represent the amount available for distribution. Currently there is approximately $78 million in tax collections at the Department of Revenue, with the total 2015-17 figured forecasted to be nearly $90 million. However, as our table shows, under normal circumstances where we do not have to worry about start-up costs being repaid first, only about $67 million of the $90 million would be available for distribution in the 2015-17 biennium. This time lag between monthly collections and quarterly tax returns is a big deal in the budget world and can be a bit confusing. At least for me it was at first when trying to wrap my head around when monies will be distributed.

The above is what our office worked on and published in our latest quarterly forecast. However, some of the costs and revenue distributions will change (or have already changed) based on legislation. For example, the same SB 845 that gives our office the forecasting responsibilities also changes to the revenue distributions. Also, SB 1057 impacts the administrative cost estimates. Additional bills remain alive in the legislative process. Our office, with the help of other agencies and legislative staff, will update the forecast as bills become law. Check back in August when we release our next forecast for all the details.

Border Effect, Weed Edition

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The border effect, or the border tax effect, is a very real. Our office has previously written about it regarding sin/vice taxes, retail sales in the Gorge, and a broader look at Oregon-Washington taxes, including an academic paper I, along with my co-author Portland State Prof. Wooster, wrote on retail sales in Washington.

So it comes as no surprise that the different timing of legalized marijuana sales in Washington first and now Oregon also shows a clear border effect. Our friends and counterparts in Washington — the Washington State Economic and Revenue Forecast Council — is currently finalizing their latest forecast and included the following graph in their meeting materials. It highlights the drop in cannabis sales in Clark County (Vancouver) relative to the overall statewide trends. The steep drop in Clark County occurred in October 2015, right as recreational sales in Oregon went into effect. As the fine print on the slide says, prior to Oregon sales, Clark County accounted for 12% of Washington sales, but in January Clark County was just 7% of statewide sales.

WAWeed0116

The graph brought to mind some very rough, preliminary work I did back in September regarding the border effect on Washington cannabis sales.  With the help of our counterparts, I threw county level sales data into a classic border tax effect model. The overall results were intuitive and make sense [1]. Washington border counties near Portland had a much higher level of sales than their demographic and economic fundamentals along would suggest. If you do the math, this quick and dirty estimate indicates that sales per adult in these border counties were 40-50% higher than otherwise expected.

WaMJresults

In reality, it turns out those were pretty decent estimates. In the months since Oregon recreational sales began, tax collections in the Washington border counties in and around Portland have fallen 35% (data here). These declines are seen in counties from the mouth of the Columbia River (Pacific County across from Astoria) through the Portland MSA and into into the Columbia River Gorge (Klickitat and Skamania Counties across from Cascade Locks, Hood River and The Dalles). At the same time, sales in the Seattle MSA are up 25%, with the rest of Washington increasing 12%. The border counties near Portland are the clear outlier and clearly impacted by the arrival of recreational marijuana sales in Oregon.

WaMJSalesChange

Overall these results are no surprise. The border effect is real and ongoing across the country. Oregon and Washington in particular provide such a natural experiment regarding tax policy and the fact that Oregon’s major population center is on the state border.

So far the border effect has been about where legal recreational sales have occurred. Now that both states allow for legalized sales, the research focus will shift to the actual impact of different tax rates on consumer behavior. Clearly, sales in Southwest Washington are lower post-Oregon sales, but depending upon product availability and consumer prices, how the balance of sales shakes out is still unknown. Oregon tax collections only began in January, so it will still be some time before we have enough data to draw solid conclusions.

[1] There are some issues with this simplified model. For one, it uses full FY2015 data. Given that sales were/are ramping up over time in a newly legalized world, it is not ideal to use a full year of data, or at least not until the phase in period is over. Also, it does not include any spatial impacts (spatial error correction or spatial autocorrelation) which is important when looking at county level sales, particularly given there are some “dry” counties where there are no retailers in Washington. Even so, the results of this basic model are both intuitive and provided pretty solid ballpark estimates.

2015 Outlook: Measure 91

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One of the more interesting and yet unknowable questions in the year ahead is what the impact of Measure 91 will be for Oregon. The basics of the vote itself and the direct implications for Oregonians have been well covered. However, the broader and bigger impact on the state’s economy and public resources are not known. The revenue estimates are fairly modest in size — relative to the size of the state budget — and the track record of such estimates in Colorado and Washington are somewhat mixed. That does not mean the impact won’t be felt, as it will. Bringing a largely illegal activity into the legal marketplace will have many benefits including the tax revenue but also additional jobs that will now have legal protections as employees can be covered under the unemployment insurance system for example, plus new (legal) businesses, operations, the regional impact in places like Southern Oregon and the like. Of course, as with all vices, not every aspect is positive and there are some downside risks associated with legalization, even if the research consensus is that marijuana is a safer alternative than other options.

However, from an economist’s perspective the two most interesting aspects are consumer preferences and potentially problematic market distortions. As for consumer tastes, what is the substitution effect of legal marijuana and how will it impact, say, alcohol and tobacco sales. Are these products purely substitutes? To what degree are they complements? University of Oregon professor Ben Hansen gave a very good and informative presentation at the Oregon Economic Forum a couple months back. Among other items, he discussed how not only are other types of products substitutes for marijuana, but how the various markets for marijuana itself can be substitutes, these include both the medical and recreational markets but also personal cultivation.

Along these lines, one interesting but also potentially troubling development is the differential between Colorado’s medical and recreational marijuana markets, due to different tax structures. In essence, due to higher taxes on recreational marijuana, it is less expensive to buy medical marijuana in Colorado. As such the state has not seen a big switch into the recreational market from medical patients and even seen medical sales increase. However, Colorado has seen a switch from the black market into the legal market (be it medical or recreational). That’s the big win from both an economic and societal point of view, bringing the illegal market into the legal one.

However these market distortions between medical and recreational can be problematic not only in terms of rules, costs and regulations but also in terms of achieving the desired outcomes or goals. Consumers will likely figure out the best option for themselves (below is a hypothetical example using Oregon’s medical application fees and Colorado’s price differentials) however that may not be the best outcome for the state overall. That’s why the work the OLCC is currently undergoing is so important — to figure out what those outcomes should be and how to set up the rules and marketplace to best achieve them.

M91Breakeven

Lastly, one additional tidbit that was somewhat surprising — to me at least — was the overall lack of clear connection between the voting results of Measure 91 and the local medical marijuana population already in the state. Besides the obvious that cultural or societal preferences and ideology has swung significantly in favor of marijuana legalization, regardless of the local medical population, there are a few additional possibilities for these results. One, particularly for a place like Josephine County with a very large OMMP patient population and yet only voted 50-50, could be that the largest medical marijuana market participants did not want to rock the boat, so to speak. They may be relatively content with the existing market and not wanting to shift the landscape for something unknown. Another possibility may be that these two populations aren’t the same. The voting population may be significantly different than the medical marijuana population. Another may be that while OMMP patients are equivalent to about 2 percent of the adult population in Oregon, that may not be a large enough share to influence overall voting patterns. Regardless, these results are interesting to see and the Oregonian has a nice interactive map of voting results across the state, even down to the precinct level in some places.

M91CountyVote

Stay tuned for a few more posts on the 2015 outlook in the coming weeks, plus a new economic recovery scoreboard that tracks progress across a whole host of measures.


Our office has received a number of comments, questions and requests about the impact of Measure 91 in Oregon, so I thought I would write down a few thoughts and concerns from our perspective heading into the new year. To be clear, so far our office has not been involved in the process at all. As with all initial revenue estimates, those are done by the Legislative Revenue Office (plus there were outside estimates as well) and since the Measure 91 revenues do not go to the General Fund (which is largely our focus) we have not been involved at this point.

Where Did The Week Go…

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Fantasy Football Losers Scarred for Life

I had the good fortune of winning my fantasy football league this year (humble brag alert).  After 16 weeks of hard work (okay, maybe not that hard), I was able to earn myself some pride points, the brief yet delusional notion that I could actually be a successful NFL GM and a nice payday.

The league I was in consisted mostly of people I’ve never met and there wasn’t really much trash-talking so there didn’t appear to be that much competitiveness (nor should there in fantasy football).  But there are certainly people out there who take things way too far.  Case in point: A group of fantasy footballers in Nebraska.

Fantasy Football tattoo - Yahoo! Sports
Whatever you do, don’t finish last in this fantasy football league. | (Yahoo! Sports)

This particular league doesn’t hold a high opinion of the person who finishes last in their league because that unfortunate individual’s punishment is getting a really bad, really tacky tattoo.

The tattoo rule goes as follows:  If your team finishes last in the league, you have to get a tattoo (designed by the other players in the league) placed on your body in a four-inch-by-four-inch space that the loser can choose.  As you can imagine, the designs from past losers, as well as 2013, are less than desirable.

While appearing on The Tonight Show with Jay Leno back in October, some of the men shared their “unique” body art.

Ranging from field-goal-kicking unicorns to Care Bears in the form of players to Justin Bieber, history shows that unmotivated fantasy players will be dealt with a swift and cruel punishment.

“The whole purpose of this league was to punish the loser so that everybody played as hard as they can every week,” said one participant.

Besides the awful design, each tattoo features the tag line: “Fantasy Loser” and the year they lost.  The cellar dweller of 2013 was forced to get a tattoo of himself swinging on a wrecking ball (a la Miley Cyrus) while holding a sign that says, “Fantasy Twerker Loser.”  Jay Leno’s face is also including on the wrecking ball.

All of the past losers have put their unseemly tats on their upper thighs, away from public view.  As well they should.  Why should we be punished too.

More People Moving to Oregon

In 2013, more individuals made the decision to move to Oregon than any other state.

More than 61 percent of all interstate moves made in Oregon were for people coming to live in the state, according to United Van Lines’ annual migration study, which tracked 129,000 moves in the United States in 2013.

For the first time in five years, Washington D.C. failed to top the list as more people migrated to the Pacific Northwest thanks to cost-saving factors such as public transit, green space and the local arts and entertainment scene.

Oregon Sign - panoramio.com
Oregon welcoming a lot more visitors. | (panoramio.com)

Oregon sign - flickriver.com

Oregon was even more appealing than California thanks to significantly better housing costs.  The median price for a single-family home in Portland is $285,000 compared to $481,000 in Los Angeles and a whopping $881,000 in San Francisco according to online real estate website Zillow.

Other popular relocation destinations included South Carolina, with 60 percent of moves made for those coming into the state, North Carolina at 58 percent and Nevada at 56 percent.

As for the opposite end of the spectrum, New Jersey saw the most defectors as 64 percent of movers left the state followed by Illinois and New York at 61 percent and Connecticut at 59 percent.

United Van Lines has been tracking the state-by-state migration patters of movers in the U.S. since 1977.

Firefighter Uses Beer to Put out Blaze

Houston fire Capt. Craig Moreau and his wife were driving home Monday night after a trip to Austin when they discovered an 18-wheeler on fire.  Moreau and the driver, whose brake problems started the fire, tried using a small extinguisher.

When that didn’t work, Moreau asked the trucker what he was hauling.  When he learned it was beer, the off-duty firefighter made the decision to use what he had available.

Both men began shaking and spraying cans of beer on the blaze until the fire eventually went out.

“I have no doubt if the beer hadn’t been there, the whole trailer would have burned up,” said Moreau.  “A few more minutes down the road and it may not have worked.”

And, for those of you wondering, the two men used Coors Banquet to put out the flames.  Moreau unfortunately didn’t snag a 12-pack for himself stating on his Facebook page: ‘I like dark beer.’

 

Where Did The Week Go…

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I’ve discussed stupid criminals on this column many times before, but this time I might have to award the great state of Oregon the stupidity trophy over a simple technicality.

Krystle Marie Reyes, a 25-year-old woman from Salem was sentenced Wednesday  to 5 1/2 years in prison for tax evasion and three counts of felony fraud after she duped the state of Oregon into giving her a $2.1 million tax refund.

I guess being a millionaire isn’t all that great.

How did Reyes, who for the past two years had earned less than $15,000 per year, manage to convince the state to make her a millionaire? Was it because she helped the elderly at retirement facilities and senior care homes? Perhaps it’s because she had no previous criminal history so they decided to reward her for good behavior.

No instead Reyes decided to report that she had earned more than $3 million in 2011. While completing an electronic tax return in late January via Turbo Tax, Reyes probably took one look at her yearly income and like many of us said, “Is that it?”

After filing the return, her multi-million dollar refund request was flagged by an automated system. The return was set aside for review by tax experts for potential fraud but before they could get the three agency employees needed to override the flagged payment, a single Revenue employee overrode it and the refund was awarded to Ms. Reyes.

It seemed like Reyes was going to get away with it. But then she made a mistake. The woman received the refund on a debit card and spent about $150,000 before twice reporting the card lost or stolen. At that point her con had been discovered and she was arrested on June 6.

The state was able to recover about $1.9 million, but what did Reyes do with the other $200,000? She decided to live comfortably by purchasing a queen-sized air mattress, a sofa and a recliner. Her spending spree also included about $1,800 in cash to buy a 1999 Dodge Caravan and $851 on tires and wheels.

So a woman is given more than $2 million because no one personally opened the file to look at her W-2. For the next few months she led the good life buying furniture, kitchen aide and a car (Why a ’99 Dodge?) Obviously what she did was wrong, but what about the employees who allowed this to happen?

Two of the four employees have been reassigned to jobs in which they will no longer have the authority to approve cash refunds while the other two received unspecified disciplinary action.

Egypt Olympic team gets uniform knockoffs

Last week I talked about the NBA eventually featuring sponsorship patches on their uniforms and how that was a terrible but predictable plan. I would be fine if all the uniforms had was a Nike swoosh or an Adidas log. Nike seems to be on everything anyways so that would be fine by me.

The Egyptian soccer team.

But there seems to be one thing Nike or Adidas isn’t on — not legitimately anyways — and that’s Egypt’s Olympic gear. According to the country’s committee chairman, Gen. Mahmoud Ahmed Ali, Egypt couldn’t afford the real thing due to the country’s current economic situation so they decided to go with counterfeits made in China.

Ali referred to the fakes as “sufficient” but tell that to the athletes wearing them. Synchronized swimmer Yomna Khallaf wrote on Twitter that she spent more than $300 of her own money to buy better training gear.

“It’s so frustrating that we had to pay extra 2000 (Egyptian) pounds to have other proper stuff to wear so that we can look okay not even good,” she tweeted.

The bags that were given to the athletes have large Nike logos on the front, but the zippers say Adidas. It’s a tough situation, but Egypt has to be frugal in how they spend their money, even if it’s at the expense of the athletes representing their country in the Olympics.

An uprising followed by 17 months of political unrest have decimated Egypt’s tourism industry and driven investors away. The country’s foreign currency dropped by more than one-half since the uprising so money is tight.

With 112 athletes represented, in addition to coaches, doctors and other representatives, this is a tacky but necessary compromise. With designer sports labels ranging in price from $300 to $500 per athlete, you do the math and decide if it’s worth it to look good while you compete?

(Update): Egypt’s Olympic team won’t be wearing Chinese knockoffs after all. Nike said Friday it was donating its gear to the Egyptian athletes. I stand corrected. Apparently it is important to look good while going for gold.

Netflix Instant Pick: Outside Providence

My pick this week is a coming-of-age film about a kid from Pawtucket, Rhode Island who gets into trouble far too often. Tim Dunphy is bored with the way his life is going. Yeah he has a lot of friends, everyone in town knows him (Because it’s small and all) and he enjoys being young by partying and getting thrown in jail on a regular basis.

A smart comedy about trying to figure things out.

But after getting arrested once again, his father arranges for him to be placed into a prep school in Cornwall, Connecticut. The terms: Graduate, or else.

The film works because it’s able to balance the raunchy humor with legitimate emotion. Dunphy, played by Shawn Hatosy, isn’t particularly bright, nor does he suddenly become smart by the end after attending prep school, but he still follows an arc that is both funny and heartfelt. The film could have easily been comprised of mindless one-liners, but the jokes never come at the expense of the story.

Of course if you’re going to have a film about a kid trying to grow up, you’re going to have a love interest and once again the movie impressed me with not following the conventional path of the pretty girl.

The filmmakers didn’t resort to making Amy Smart parade around in tight tops and short skirts in order to convey her beauty. She’s smarter than Dunphy and clearly out of his league, but the film doesn’t go down that road. For one school year these two characters just have a connection and it’s an enjoyable ride.

But the best thing about this movie is Dunphy’s dad played by Alec Baldwin. A blue-collar worker from a small town, Tim Dunphy is hard on his son. His nickname for his son is a certain female sex toy and he makes him hitchhike around town. But he loves him and he wants what’s best for him without showing too much emotion.

When attempting to give his son some advice for having sex, old man Dunphy says, “Making sex is like a Chinese dinner: It ain’t over ’til you both get your cookies.” He has a lot of great one-liners like that.

The film was made in 1999, takes place in the ’70s and it’s refreshingly politically incorrect. On the surface it appears that the filmmakers are making fun of the handicapped, homosexuals and drug use. This isn’t a film that could be made today. But the story needs these touchy issues so that the characters can grow and learn something by the end.

Outside Providence features a strong cast, a smart and funny screenplay, an awesome ’70s soundtrack and a story that’s both entertaining and endearing.

Shorter Work Week Could Save Oregon Millions

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Friday, March 18th marks the first of two furlough days this year for state employees in Oregon, the second being May 20th. This is just one way the state is coping with the loss of state revenue due to the economy. This Fridays closure will save the state about $2 million dollars.

Another proposal on the table to curb lost revenue, includes moving to a 4-day workweek for state employees. House Bill 2932 is sponsored by Paul Holvey a Democratic Representative from Eugene and Kim Thatcher a Republican Representative from Keizer. The bill proposes that the state government essentially change their current M-F hours of operation to 7am to 6pm, Monday through Thursday. Thatcher proposed a similiar idea two years ago, to no avail. Citing Utah’s success with their initiative, he is putting it on the table yet again.

July of 2008, Utah’s Governor Jon Huntsman Jr. issued an executive order launching the Working 4 Utah Initiative. The one-year pilot project, began August 4, 2008 and changed the work schedule of most state employees from five 8-hour days a week to four 10-hour days a week. At the end of the pilot project, a performance audit was conducted of the initiative. The audit found that the switch has saved the state less than $1 million. The shorter work week also led to productivity issues among employees. A bill just approved by utah’s House this month will return Utah to a 5-day workweek. The measure passed 53-8 and now moves to the Senate for its consideration.

Clackamas County launched their pilot program on Nov. 1, 2008 and made its four-day week permanent in 2009. Clackamas officials have estimated the county government has seen annual savings of $55,828 because of lower power use. They have also estimated $102,100 saved in gasoline costs. The County comissioned a survey of its residents prior to permanently enacting the 4-day work week. Gilmore Research conducted over 400 phone interviews with randomly selected residents. 44% of those interviewed said they thought the longer hours (Monday through Thursday) made it more convenient to visit County offices, but over half (51%) said longer hours made no difference and 5% were unsure. Those most bothered by the change, are residents who frequently need to obtain permits or access to social services. Overall, the survey revealed residents to be accepting of the change.

Moving most state agencies to a 4-day workweek, Oregon Legislature hopes to make our state government more effective and efficient. Ultimately following in Clackamas County’s footsteps with annual savings as a result. This is just one of several proposals in the 2011 Legislature aimed at making state government more efficient. Other proposals include shared motor pools, streamlining governement regulations and one even proposes abolishing the Department of Energy. Facing a $3.5 million budget gap, Oregon lawmakers certainly won’t be taking any proposals off the table just yet.

By Lindsey Asay